2. Organizational decision making:
the process of responding to a problem by
searching for and selecting a solution or
course of action that will create value for
organizational stakeholders
Types:
Programmed Decision
Non-Programmed Decision
3. Decision Making - Types
Programmed Decision
– Routine, virtually automatic decision making that
follows established rules or guidelines.
Non-Programmed Decision
– Nonroutine decision made in response to unusual or
novel opportunities and threats.
– The are no rules to follow since the decision is new.
4. Individual Decision Making
Rational approach – ideal method for
how managers should make decisions
Bounded rationality perspective – how
decisions are made under severe time and
resource constraints
6. Limitations for the Rational
Decision Making Model
requires a great deal of time
requires great deal of information
assumes rational, measurable criteria are available and
agreed upon
assumes accurate, stable and complete knowledge of all
the alternatives, preferences, goals and consequences
assumes a rational, reasonable, non – political world
7. Bounded Rationality Perspective
There is a limit to how rational managers
can be—time and resource constraints
– Nonprogrammed decisions
Constraints and Tradeoffs
– Constraints impinge the decision maker
The Role of Intuition
– Experience and judgment rather than logic
11. Management Science Approach
Use of statistics to identify relevant
variables
Remove human element
Very successful for military problems
Good tool for decisions where variables
can be indentified and measured
A drawback of management science is that
quantitative data are not rich and lack tacit
knowledge
12. The Carnegie Model
Introduces a set of more realistic assumptions
about the decision-making process
– Satisficing: limited information searches to identify
problems and alternative solutions
– Bounded rationality: a limited capacity to process
information
– Organizational coalitions: solution chosen is a result
of compromise, bargaining, and accommodation
between coalitions
14. Differences Between the Rational
and Carnegie Models
Rational model Carnegie model
Information is available Limited information is available
Decision making is costless Decision making is costly
Possible alternatives are
generated
Limited range of alternatives are
generated
Solution is chosen by unanimous
agreement
Solution is chosen by bargaining
and compromise
Soln chosen is best for the orgn Soln chosen is satisficing for the
orgn
17. Garbage Can Model
Garbage Can
Model -
a theory that
contends
that decisions in
organizations are
random and
unsystematic
Problems
Solutions
Choice
opportunities
Participants
18. Garbage Can Model
Pattern or flow of multiple decisions
Think of the whole organization
Explain decision making in high
uncertainty - organized anarchy:
– Problematic preferences
– Unclear, poorly understood technology
– Turnover
Streams of events instead of defined
problems and solutions
19. Consequences of the
Garbage Can Model
1. Solutions may be proposed even when
problems do not exist
2. Choices are made without solving
problems
3. Problems may persist without being
solved
4. A few problems are solved
21. Unstructured Decision Making
Model
Takes place when uncertainty is high
Unprogrammed decisions
Not a sequential process
Involves unpredictable decisions
24. Design Essentials
Most decisions are not made in a logical manner
Individuals make decisions, but organizational
decisions are not made by a single individual
Conflict exists when problems are not agreed on
The garbage can model has become a description of
decision-making
Organizations operate in high-velocity environments
Allowing biases to cloud decision making can have
negative consequences